International Seaways narrows losses

Nov 10 2017


International Seaways reported a third quarter net loss of $21.8 mill, compared with net loss of $50.9 mill, for 3Q16.

The net loss reflected $7.3 mill in vessel impairment charges and $1.2 mill in debt modification fees, and a decline in TCE revenues, compared with 3Q16.

Net loss for the nine month period ended 30th September, 2017 was $15.4 mill, compared with net income of $39.5 mill for the first nine months of 2016.

Consolidated TCE revenues for 3Q17 were $56.5 mill, compared to $77.2 mill in 3Q16. Shipping revenues for the third quarter of 2017 were $60 mill, compared to $80.8 mill in the same period of 2016.

Consolidated TCE revenues for the first nine months of 2017 were $209.9 mill, compared to $302.8 mill for 2016’s nine-month period. Shipping revenues for the nine months were $220.7 mill, compared to $312.5 mill in the previous year’s nine-month period.

Operating loss for the quarter was $11 mill, compared to operating loss of $35.3 mill for 3Q16. Operating income for the nine month period was $20.2 mill, compared to operating income of $70.5 mill for the 2016 nine-month period.

Adjusted EBITDA was $15.8 mill for the quarter, compared to $37.1 mill in 3Q16, principally driven by lower daily rates. Adjusted EBITDA was $94 mill for the 2017 nine-month period, compared to $184.5 mill for the 2016 period.

TCE revenues for the crude tankers segment were $34.9 mill for the quarter, compared to $50.2 mill in the third quarter of 2016. This decrease resulted primarily from the impact of significantly lower average blended rates in the VLCC, Aframax and Panamax sectors, with spot rates declining to $16,200, $10,800 and $11,100 per day, respectively, aggregating around $14.1 mill.

The decline also reflected decreased revenue in the crude lightering business, due to hurricane-related disruptions and lower full-service lightering margins and fewer revenue days in the Panamax and Aframax sectors, resulting from an increase in drydocking days.

The addition of the two 2017-built Suezmaxes, each of which delivered to the company in July, partially offset the declines in revenue.

Shipping revenues for the crude segment were $38.3 mill for the quarter, compared to $53.5 mill in 3Q16. In addition, shipping revenues for for the nine-month period of this year were $146.1 mill, compared to $212.9 mill in the 2016 nine-month period. TCE revenues were $136.7 mill for the first nine months of 2017, compared to $204.1 mill for the 2016 nine-month period.

TCE revenues for the product carrier segment were $21.6 mill for the quarter, compared to $27 mill in the third quarter of 2016. This decrease was primarily due to a decline in average daily blended rates earned by the MR, LR1 and LR2 fleets, with spot rates declining to $10,100, $11,100 and $12,000 per day, respectively. The decline in blended MR, LR1 and LR2 rates accounted for $5 mill of the decline in TCE revenues.

Shipping revenues for the product carriers segment were $21.7 mill for the quarter, compared to $27.2 mill in 3Q16. For the nine-month period, TCE revenues were $73.2 mill, compared to $98.8 mill for the 2016 period. Shipping revenues were $74.6 mill for the 2017 nine-month period, compared to $99.6 mill for the same period in 2016.

During the quarter, the company took delivery of the ‘Seaways Hatteras’ and the ‘Seaways Montauk’, 2017-built Suezmax newbuildings. Both commenced trading in the Blue Fin Suezmax pool.

Subsequent to quarter’s end, International Seaways agreed to acquire a 2010-built VLCC for $53 mill. The vessel was delivered in November and will commence trading in the Tankers International pool.

During 3Q17, the company sold a 2001-built MR, which was delivered to her buyers in August, 2017, and recognised a gain of $1.9 mill. Subsequent to quarter’s end, the company agreed to sell a 2004-built MR and a 2002-built MR, which are scheduled to be delivered to buyers during November, 2017 and the first quarter of 2018, respectively.

During the quarter, the five-year contracts for the company’s FSO joint ventures with Euronav commenced with North Oil Company (NOC), the new operator of the Al Shaheen oil field, off the coast of Qatar.

The new contracts, which involve the ‘FSO Africa’ and ‘FSO Asia’, are expected to generate in excess of $360 mill of EBITDA for the joint venture over their five-year terms. Based on International Seaways’ 50% ownership in the joint venture, the contracts are expected to generate in excess of $180 mill of EBITDA for the company.

Lois Zabrocky, International Seaways’ president and CEO, commented. “We have continued to benefit from our lean and scalable model with low breakevens in a challenging tanker market, while taking steps to further implement the company’s disciplined capital allocation strategy and maintain its solid contracted cash flows.

 “During the quarter, we have capitalised on attractive asset values with the acquisition of two Suezmax tankers and a recent acquisition of a 2010-built VLCC. In addition to growing our diverse fleet, we took advantage of our strong balance sheet to return capital to shareholders during the quarter, as we opportunistically executed on our share repurchase programme.

“Consistent with our focus on fleet growth and renewal, we also sold a 2001-built MR, which delivered to buyers during the quarter, and recently agreed to sell two additional MR tankers. We also commenced two five-year contracts for our FSO joint ventures during the quarter, which are expected to generate in excess of $180 mill of EBITDA for the company over the contract period.

“We are pleased with our initial progress growing and modernising our fleet, which has enabled International Seaways to reduce the average age of its fleet and increase our size on a dwt basis. We remain in a strong financial position with the flexibility to pursue additional compelling growth opportunities as asset prices continue to be historically low.

“With our balanced fleet deployment and contracted cash flow from our joint ventures and fixed-rate charters, we also continue to maintain the ability to both optimise revenue through the current tanker cycle and benefit from a market recovery in both the product and crude tanker sectors,” he concluded.



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